Octagon Pension Scheme has launched a new innovative digital pension scheme to give workers in the informal sector a platform to save for their retirement.
The product dubbed MOBIKEZA allows contributors to make unlimited deposits and periodic withdrawals via USSD or an app.
Mobikeza will cater to the youth, JuaKali artisans, and workers in Micro-Small and medium-sized Enterprises (MSMEs) that lack a means of saving for their old age.
Low pension uptake has been due to the unaffordability of pension plans for workers with uncertain incomes.
Octagon’s Managing Director said the product targets to register one million workers in under 12 months with individuals saving as little as Sh1 through their mobile phones.
Octagon is leveraging technology to disrupt the pension market that has low uptake in Kenya compared to other nations. Pension coverage in Kenya is low at 20 percent compared to 80 percent in high-income economies.
Out of 13 million workers, only 3 million have a saving for pension with the informal sector constituting 80 percent of the workforce.
The growth of Mpesa has facilitated the development of innovative mobile products due to the ease of depositing and withdrawing and integrating products with the Mpesa ecosystem.
In addition, mobile penetration has allowed FinTechs to disrupt the industry. Transacting on an app and linking it to Mpesa is secure from cybersecurity risks, allows real-time processing, deposits, and withdrawals locked in member mobile number, only registered number can access the MobiKeza system.
Mobikeza customers can monitor their daily, monthly, and annual yields thus will boost savings to guarantee a comfortable life after retirement
Recommendation to tap into new customer
In line with Retirement Benefits Authority (RBA) five-year plan, RBA’s CEO Nzomo Mutuku asked pensions schemes to offer tax incentives on savings.
In addition, RBA said it would link Independent Pension Plans (IPP) to their website to increase enrolment. RBA intends to bring SACCOs on board to enroll members into IPP.
Nzomo asked pension schemes to bundle pension with other services such as life cover, funeral cover, medical cover, credit facilities, and insurance aspects. Mobile app should incorporate other services such as statement, fill in next of kin details.